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“Blue ocean strategy” by W Chan Kim and Renee Mauborgne

Interesting how red has a negative connotation and blue has a positive one. Mr. Kim and Mauborgne, in their book “Blue Ocean Strategy” compare the bloody red ocean strategies (doing more of the same) vs. re-defining the name and rules of the game in a nice blue ocean (without the bad weather). This book provides great ideas about thinking about the customer first, making the competition irrelevant in the process.

Why do many companies compare their products with what the competition is doing and fight a features war while needing to be very careful on costs? Why not look at what the customer needs and wants to focus on that instead? In a step-by-step approach, “Blue Ocean Strategy” provides a way of defining a strategy that will make the competition irrelevant and minimize costs at the same time. A well-worth read!

Kim and Mauborgne’s blue ocean metaphor elegantly summarizes their vision of the kind of expanding, competitor-free markets that innovative companies can navigate. Unlike “red oceans,” which are well explored and crowded with competitors, “blue oceans” represent untapped market space and the opportunity for highly profitable growth. The only reason more big companies don’t set sail for them, they suggest, is that the dominant focus of strategy work over the past twenty-five years has been on competition-based red ocean strategies-i.e., finding new ways to cut costs and grow revenue by taking away market share from the competition. With this groundbreaking book, Kim and Mauborgne-both professors at France’s INSEAD, the second largest business school in the world-aim to repair that bias. Using dozens of examples-from Southwest Airlines and the Cirque du Soleil to Curves and Starbucks-they present the tools and frameworks they’ve developed specifically for the task of analyzing blue oceans. They urge companies to value innovation that focuses on utility, price, and cost positions, to create and capture new demand and to focus on the big picture, not the numbers. And while their heavyweight analytical tools may be of real use only to serious strategy planners, their overall vision will inspire entrepreneurs of all stripes, and most of their ideas are presented in a direct, jargon-free manner. Theirs is not the typical business management book’s vague call to action; it is a precise, actionable plan for changing the way companies do business with one resounding piece of advice: swim for open waters.

“Blue Oceans Strategy” not only offers very valuable insights about a different way of looking at strategy (compared to the traditional beat the competition view) but also provides the tools and framework to make it work. Through the use of many examples throughout the book, ranging from a circus, to a police department and the car industry, this book helps formulating a strategy for a company or a product that focuses first and foremost around what the end-user / customer really wants and needs, minimizing or removing everything else. To use the terminology of this book, it’s about value innovation, as the goal is to make the make the competition irrelevant by making a leap in value for buyers (and your company as a side effect). Throughout the book, Mr. Kim and Mauborgne provide a framework and the analytical tools to pursue differentiation and low cost simultaneously.

The book details six principles of blue ocean strategies:

Reconstruct market boundaries

Focus on the big picture, not the numbers

Reach beyond existing demand

Get the strategic sequence right

Overcome key organizational hurdles

Build execution into strategy

As those who know me are aware, I am a strong believer that technology should be the tool and not the goal. The Blue Ocean strategy described in this book fits perfectly with my focus on customers first. It provides a very nice strategic correspondent to the “Inmates are running the asylum” book that I blogged previously, which is more targeted at the technology-focused people: FOCUS on the end-user! I am not going into further details here, and highly recommend that you get your own copy of this book and read it through. Well worth the time.